Seanad Éireann díospóireacht -
Thursday, 14 Dec 2000

Vol. 164 No. 21

Appropriation Bill, 2000 (Certified Money Bill) : Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of Health and Children (Ms Hanafin)

This Bill is traditionally one of the last items of legislation which the House debates before the Christmas recess. Its core purpose is to give statutory effect to the departmental Estimates for the supply of services, both current and capital, including all Supplementary Estimates which were approved by the Dáil since the last Appropriation Act.

The Bill appropriates to the various services listed in the Schedule for the year ending 31 December 2000 the net sum of £16,864,443,000. The total amount comprises the original net Estimates of £16,374,866,000 as approved by the Dáil last June and net Supplementary Estimates totalling £489,577,000 which have been approved by the Dáil in recent weeks.

The Bill also seeks approval for the use of departmental receipts amounting to £1,789,557,000 as appropriations-in-aid of the services listed in the Schedule. The Estimates and Supplementary Estimates which are included in the Schedule have been approved by the Dáil and the Bill seeks to give them formal legal effect.

The debate on the Bill also provides an opportunity to review the budgetary and economic position and, in particular, our economic performance in 2000 when we continued to experience strong economic growth and buoyant public finances. GNP growth in real terms for 2000 is estimated at 8.6%, somewhat higher than the 6.3% originally forecast this time last year. A number of factors have contributed to this strong performance, including a strong international economy, the falling value of the euro and buoyant domestic demand conditions. Economic growth has averaged about 8% since 1993. For the year as a whole, employment is expected to increase by 74,000. This is an increase of 4.5% compared to 1999. In response to the exceptional demand for labour, unemployment is now at an historic low, 3.7% for November compared to an average of 5.5% for 1999.

Our exceptional economic performance continues to transform our public finances with yet another general Government surplus expected this year of 4.7% of GDP. Furthermore, the general Government debt to GDP ratio continues to fall rapidly and is now projected to fall to 39% for the year 2000. In 1997, this figure was 65%.

While the economy is in good shape, inflation presents a problem. Last summer the Government introduced measures to address domestically generated inflation and on budget day the Minister, Deputy McCreevy, announced further specific measures. Latest figures show that the Government's measures to control inflation, which has been fueled mainly by external factors, are having an impact. The current published forecast is for inflation to average 5.5% for 2000.

Inflation is estimated to fall in 2001, with an average rate of 4.5% now expected for next year. These forecasts assume that the adverse effects of this year's oil prices and interest rates and of the declining euro will unwind through 2001. These projections also assume pay moderation within the social partnership framework over the period.

The outlook for the economy is strong. Real growth in GNP is forecast to slow from an estimated 8.6% this year to an average rate of 6% in 2001 to 2003. Employment growth is expected to moderate from 3.5% in 2000 to an annual average of 2.5% over the period to 2003. Continued significant budgetary surpluses are anticipated in 2001 and beyond, with the debt GDP ratio falling to 24% by 2003. At least 1% of GNP will continue to be allocated to the national pension reserve fund. The amount of the fund already stands at over £5 billion.

My colleague, the Minister for Finance, set out some core strategic objectives for this year's budget. The measures he announced will manage the economy to secure our continued success, improve our quality of life, promote a fairer society and reward work and enterprise through ongoing tax reform. This Government has ensured that its policies continue the disciplined approach to budgetary policy which has contributed to Ireland's exceptional economic performance. To sustain this performance, we must continue with a prudent approach to the public finances in line with the stability and growth pact and within a budgetary framework which enables us to maintain competitiveness. This involves adherence to and implementation of the terms of the Programme for Prosperity and Fairness and the implementation of the national development plan.

The partnership approach has underpinned the success of the economy since 1987. In a consensus based approach to wage determination covering both the public and private sectors, successive multi-annual agreements have sought to improve the competitiveness of the economy through partnership. The Programme for Prosperity and Fairness focuses on the continued competitiveness of Ireland in a global economy and the need for a flexible, dynamic and well educated workforce. It aims to further enhance living standards and reduce social exclusion on a basis that will prove sustainable over the longer term.

The programme is dynamic and flexible. This has already been tested by the response of the Government and the other social partners who worked within the framework of the new agreement to deal with the difficulties arising from the recent higher than anticipated inflation rate.

In my role as Minister of State with special responsibility for children, I wish to take this opportunity to mention the recent budgetary measures in relation to children. Recently I published our first national children's strategy which represents a significant advance in the priority afforded to children in public policy. Building on this Government's commitment to the welfare of our children, the measures announced in this year's budget are the largest ever package of sup ports for children and their parents. It is, in fact, the first children's budget in the history of the State. These measures include significant increases in child benefit rates – the first step in a three year programme, additional supports for foster parents, including the increase of up to 180% in the allowance payable to foster parents who play a vital role providing a home and support to vulnerable children and the extension of both paid and unpaid maternity and adoptive leave periods.

In addition, the Government has also put in place a wide range of measures to increase the supply of child care places. The national development plan includes £250 million for child care and a further £40 million has recently been added to this. A number of changes to tax law were introduced in recent years to encourage the increased supply of child care facilities. Discussions will take place with employers' bodies on how the rules for existing schemes might be modified to increase the provision of child care facilities at a reasonable tax cost to the Exchequer. We are introducing a major Civil Service child care initiative. A total of £10 million in capital will be provided to allow for 15 Civil Service crèches throughout Ireland over the next two years. It is the Government's intention that these policies, together with those priorities outlined in the national children's strategy, will accelerate the move towards the elimination of child poverty in Ireland.

I will now briefly outline some of the detail of the Appropriation Bill before the House. Section 1 – appropriation grants – gives statutory effect to the departmental Estimates for the supply services, non-capital and capital, including all Supplementary Estimates which were approved by the Dáil since the last Appropriation Act. The Dáil approved the original 2000 net Estimates for departmental expenditure which totalled £16,375 million on 27 June 2000. Since then, the Dáil has approved a number of Supplementary Estimates for various Departments which in total amount to £489 million.

This extra amount brings the total grant for supply services expenditure in 2000 to £16,864 million. Section 1(1) of the Bill appropriates this total amount of £16,864 million to the various supply services or Departments as listed in the Schedule. In addition, section 1(2) provides for the application of a total amount of £1,789 million in departmental receipts as appropriations-in-aid of the grants for the supply services listed in the Schedule.

I will outline briefly the main factors which have given rise to the additional expenditure and the requirement for the Supplementary Estimates this year. Four Departments accounted for £468 million or 95% of the total Supplementary Estimate of £489 million. The main factors giving rise to the extra allocations in these areas are as follows.

An extra net allocation of £192.5 million was granted to the Department of Education and Science. Of this, £88.8 million was needed to cover an expected shortfall in EU receipts in 2000, £37.5 million was granted for early payment of capitation grants to schools, £27.4 million was for additional pension costs, £17 million was provided for additional capital for schools and £10.3 million was for teacher and child care assistant costs. This additional allocation brings the total net 2000 Estimate for the Department to £3,258 million.

Net additional funds of £121 million were approved for the Department of the Environment and Local Government. Of this, £80 million was provided to accommodate an increase in expenditure which arose because of better than anticipated progress in major road improvements projects together with higher costs. A further £45 million was granted for the water and sewerage services programme, an extra £30 million is being provided to address the funding requirements of local authorities and an additional £23 million is being provided to cover the cost of accommodating asylum seekers. The excesses were partially offset by a £50 million underspend in the local authority and social housing programme due to delays in the regeneration of Ballymun project and savings of £10.6 million due to a slower than anticipated start to the village and urban renewal operational programme under the NDP. This extra funding brings this Department's total net 2000 Estimate to £1,762 million.

The Department of Health and Children was granted an additional net £111.5 million. Of this, £46 million was allocated to cover the cost of various pay deals, £41 million was provided for the demand led drug schemes, a further £22 million was needed to cover GMS payments, an extra £21 million was provided to fund PRSI and superannuation costs and £18 million was required for hepatitis C High Court awards payments. These additional costs were partly offset by buoyancy from the health contributions to the Vote. The total net 2000 Estimate for the Department of Health and Children was £3,638 million.

Net additional funds of £43.2 million were granted to the Department of Justice, Equality and Law Reform mainly to provide funding for the buy-out option of the private financing element of the contract for the new Midlands Prison in Portlaoise. This extra allocation brings the total net 2000 Estimate for this Department to £1,058 million.

The other main spending area in 2000 was the Department of Social, Community and Family Affairs where the total net Estimate was £2,877 million.

I will deal finally with section 2 of the Bill. Article 17.1.2º of the Constitution requires that the financial resolutions of each year must be enacted into law by the end of that financial year, that is by 31 December 2000 in the case of the financial resolutions passed on budget night, 6 December. However, Article 17.1.2º also allows for the 31 December deadline to be deferred if an Act to that effect is passed before the end of 2000. This section makes provision for this deferment to be invoked.

This provision of this section of the Appropriation Bill will maintain the normal statutory deadlines for passing budget measures into law, namely, 84 days for completion of the Second Stage and four months for enactment of the Finance Bill. Identical provisions were included in the 1998 and 1999 Appropriation Acts.

In commending the Bill to the House, I would say that while we can all be proud of our continuing prosperity, this prosperity brings its own challenges. In facing these challenges, the Government remains committed to ensuring that all sections of society receive a fair share of our increasing national prosperity. The necessary resources will be applied to improving priority public services which will enhance the quality of life and living standards of all.

Mr. J. Doyle

I welcome the Minister to the House and thank her for a very comprehensive speech on the state of the nation. The Appropriation Bill gives statutory effect to moneys approved under the departmental Estimates for the current year. The sum provided is just under £17 billion, a staggering figure. The Bill appropriates this sum to the various services listed in the Schedule.

I pay tribute to the Government in regard to the excellent financial returns for the year. We have enjoyed extraordinary growth over the past seven years. The Minister for Finance informed us on budget day that he expected this growth to continue but that it would slow down somewhat from the estimated 8.6% in GNP terms this year to an average of 6% by 2003.

A number of factors underpin the economic progress made in recent years, most notably social partnership and a favourable tax regime, particularly for foreign industrialists. This tax regime, which has been in place for many years, is one of the main attractions for foreign industry. I compliment the Taoiseach on defending our right at Nice to set our own rates of tax. The loss of that power would have had a tremendous effect on our future economic growth.

Ireland is the envy of most European nations due to our economic growth and falling unemployment figures. Inflation is the real difficulty we face in the coming years. Last year the Minister of State at the Department of Finance, Deputy Cullen, when addressing the House on the Appropriation Bill, stated that prices had remained under control and that inflation was expected to average 1.6% for the year, significantly less than the 2% projected at the start of the year. Unfortunately, that forecast has not held true and inflation is now running at 7%. Few people can question the difficulties posed by inflation in the economy. The fact that the increase in the rate of inflation over the past 12 months was not anticipated resulted in the Programme for Prosperity and Fairness failing to deliver real wage increases. Trade unions were, therefore, forced to renegotiate the PPF.

The Government is in no doubt about the fact that the recent increase in inflation is a serious challenge to the future growth of our economy. The Minister for Finance introduced an anti-inflation package on budget day which he hopes will result in inflation averaging in the region of 4.5% for 2001. The Government has delivered on the promised income tax reductions and has cut the rates of indirect tax such as excise and VAT. The latter measure will help to reduce inflation but I am concerned that the reduction of the top rate of tax will result in the economy overheating and will lead to a further increase in inflation.

It is imperative that the third prong of the Government's attack on inflation is implemented as soon as possible, namely, encouraging people to save rather than spend. I sincerely hope the Minister will introduce an attractive saving product in the Finance Bill. Young people have the greatest amount of disposable income and they should be encouraged to save their money. I watched a programme on RTÉ last night about how some young people spend their money foolishly, and I found it disappointing and depressing. Young people feel they have to spend their money because they do not see it having any real value in the long term.

Our economic growth has resulted in higher consumer spending, as evidenced by the number of new cars on our roads. Up to October this year, more than 100,000 new vehicles were registered in Dublin. While the numbers of cars on our roads have increased over the past five years, the available road space has remained the same, leading to congestion and delays. We seem to be very slow to put in place infrastructure to deal with this problem. The port tunnel is long overdue, the Coombe bypass, with which the Minister will be familiar from her time on the city council, has yet to commence and the eastern bypass is urgently needed. Will we ever see the Luas system, which was announced with great fanfare over four years ago? The introduction of the quality bus corridors is a very slow process, although the corridors are very successful where they have been introduced – there has been a 150% increase in the number of passengers using buses on the Stillorgan bus corridor.

The Minister referred to money underspent by various Departments. She cited the example of money which Dublin Corporation did not spend in regard to the Ballymun project. This is not a sign of dereliction of duty on the part of the corporation. The project has been delayed because of the number of appeals made. It is disappointing to see people opposing essential developments of this nature.

Our economic growth has also resulted in increasing house prices and labour shortages. House prices in Dublin have more than doubled in the past four years. While they have stabilised somewhat in recent months, they are still much too high, especially for young people who are seeking to purchase their first house or apartment.

The labour shortage is particularly evident in our hospitals. I am a member of a number of hospital boards which have sent executive staff to the Philippines to recruit nurses. I do not know what will happen when that well in the Philippines dries up.

The same problem is beginning to raise its ugly head in the catering industry. Two years ago the Eastern Regional Health Authority, of which I am a member, built a very attractive nursing home in Dalkey, in the Minister's constituency, which remained closed until recently. Initially there were difficulties recruiting doctors, which were resolved. Then there were difficulties recruiting nurses, which we also resolved. However, we still could not open as we could not get catering staff. We must address the labour shortage which is a feature of our prosperity.

We are experiencing problems at this time of tremendous economic growth which we did not experience in the 1980s during recession. We have long waiting lists for our hospitals, which was not a problem in the 1980s. Most frightening is the number of homeless in society. It is frightening to see the number of people sleeping rough in our cities; this did not happen in the 1980s when there was less economic growth. I am worried by the number of young people sleeping rough in the capital city. I know the Minister of State has a special interest in this and I welcome the provision made in the budget for the homeless which I hope will go some way towards solving the problem. Homelessness is a very complicated issue and money does not really solve the problem. Recently I was encouraged to hear 30 additional places would be provided for homeless people between December and January.

I compliment the Minister of State on the very important role she has played in relation to children. We are all heartened by the provisions made in the budget for children. Children's allowances have been increased and, more importantly, there is a huge increase in the money made available for fostering children, with the provision of £200 per week. No child should now be left without a home given that tremendous increase, and I congratulate the Minister in that regard.

All Governments have contributed to achieving our economic progress. I would like the Minister of State to convey to the Minister of State at the Department of Finance, Deputy Cullen, my sincere thanks for the presentation he made to each Member. It was initially introduced last year as a millennium presentation, and I am delighted the Minister has continued the gesture. It is very striking and we are most grateful.

I wish the Minister and her staff a very happy Christmas.

Mr. Finneran

I join with Senator Doyle in welcoming the Minister of State, Deputy Hanafin, to the House. I compliment Senator Doyle on his very objective analysis of the Appropriation Bill and of the performance of the Government in economic terms. It is very refreshing to hear such comments from across the floor, and for credit to be given where it is due.

We are living in a fortunate time. We are giving statutory effect to an Estimate of £17 billion to run the State for a year, an extraordinary amount of money. When we look at what is involved the real positive elements in the economy can be seen.

Not so long ago the House passed legislation which allowed a fund of £5 billion to be set up to pay for pensions over the next 50 years. Who would have thought such legislation would be necessary or of value 15 or even ten years ago? We could not contemplate such legislation as we did not have the necessary finances. We also passed legislation last week allowing the NTMA to deal with credits under the social insurance fund, amounting this year to £630 million. Not so many years ago the budget had to supplement the social insurance fund to the tune of £1,000 million. We have turned the corner in terms of economic performance and the budgetary measures in recent times, particularly this year, have succeeded in a very positive way in creating social inclusion and having that wealth distributed on a reasonably equal basis among citizens.

It is right that it should be so as we would not have reached this position had it not been for the partnership agreements which we have had over a long number of years and which have been the cornerstone of success. Without such agreements we would not be applauding ourselves at this time. All those who were party to the agreements – the Government, trade unions, farmers and business – can feel justly proud of their involvement. The success of the social partnership has resulted in the large budgetary surplus and its redistribution is desirable and due to the citizens, and we must compliment the Government in this regard.

The Minister of State has responsibility for children and has a very proud record after a very short time in office. Nobody could say that the budget has not identified two very important areas which to some extent have lagged behind, namely, child care and the elderly. This was a most caring budget. I worked in the health services for 20 years and I know many pensioners put off going to their GP to get a prescription because of the cost and the fact that other expenses may not be met by them. That is no longer the case for anybody over 70 years of age. This provision is the most advanced social measure since Donogh O'Malley decided second level education should be made available free to all, and the Government and the Minister deserve credit. Those to whom I have spoken since the budget have repeatedly referred to this provision and I believe it will be talked about in years to come as one of the real steps forward in terms of looking after those who were the founders and original builders of the State, and those people are thankful.

Our tax regime is the envy of many other states in the EU. The Taoiseach, the Minister for Foreign Affairs and the Government generally are to be complimented on protecting the national interest by not allowing any change in our tax regime, which is helpful in bringing in major US investment. I have repeated over many years that Europe has only two English speaking nations, this country and our next door neighbour, the island of England, Scotland and Wales, and that the US will obviously look to English speaking nations in which to invest. This is no reflection on the rest of Europe, and it is very important that Ireland and its neighbours have a good working relationship given that Europe will expand and, since it cannot expand out into the Atlantic, it will expand towards the Ural Mountains. In the future, therefore, the interests of these two islands must synchronise more and more.

I was very pleased to see that at the Nice Summit that relationship gelled, and gelled in the interests of this country, when Tony Blair and Bertie Ahern, Prime Ministers of two neighbouring friendly nations, put their heads together and put the interests of Ireland first and that the 12.5% corporation tax regime that we have was protected and is not on the agenda for discussion in the future. That was the most important strategic economic decision of this year after the budget.

Let me mention an area of policy that I believe should take priority. My colleague, Senator Joe Doyle, mentioned that 74,000 extra people will be employed here this year. That is a major step forward. However, it creates its own problems, particularly in the city of Dublin. The Government's decision to divide the country into areas with Objective One status and areas of transition was very important. Its implementation on the ground should now be further fuelled by a con centrated effort to develop the regions, particularly those with Objective One status, over the next five or six years. Many of the ongoing problems in this city could be relieved if the strategic policy of moving industry to the regions was implemented. In the last three or four weeks three decisions have been taken that would support that – a major announcement of jobs in the Cavan area, a major announcement of jobs in the Carrick-on-Shannon area and, only two days ago, a major announcement of jobs in the Longford area. I hope this policy continues and that in implementing Government policy on this matter IDA Ireland will encourage and promote locations in the Border, midland and western regions. There is plenty of scope and less congestion. In this modern era of technology and communications these locations are as suitable as any in Dublin. If I have one message for the Minister it is to urge that the decision to divide the country into areas with Objective One status and areas of transition be implemented in a practical way by locating industry in the region in question, and that when decentralisation of Departments and sections of Departments takes place, that will also be concentrated in that region.

As a country that has benefited greatly from US investment – we have listened to President Bill Clinton and compliment him on his involvement here over the last eight years – we must be conscious that the United States will have a new President. We await his pronouncements regarding foreign policy and investment. It is of vital interest to us that the status quo be maintained and that the encouragement we have had over the past eight years continues. I wish the new President well. Let us hope he will continue the outward approach to investment and that he will continue to see Ireland as a location in which to put down a stake in the context of involvement in the European Union and the Single Market. That has been the hallmark of American industrial policy over the past number of years and we have benefited greatly from it. I have already mentioned the circumstances that allow that type of development to take place here. Irrespective of that, however, American presidential and government policy on Capitol Hill will play a part in our affairs. Let us hope that the Bush regime casts a friendly eye on this nation during its term of office.

Let me turn to the question of inflation. Last year's predictions regarding inflation were not borne out, but it must be recognised that it is now decreasing and is expected to be at 4.5% over the next 12 months. An analysis of the past 12 months would highlight a number of events that no Minister could have predicted, except perhaps by looking into a crystal ball. The first was that the euro fell lower than most commentators expected. It was generally expected that the euro would trade favourably with the dollar and the yen. That did not happen. There was a slippage of maybe 20%, and that had knock-on effects.

Mr. J. Doyle

It had benefits too.

Mr. Finneran

It had benefits in particular industries which were exporting into the British market—

Mr. J. Doyle

And the American market.

Mr. Finneran

—and the US market. However, there were disadvantages for companies which were importing, and we have industries that import from the UK and from the US. Some 27-28% of our trade is still with the UK.

To return to the analysis of inflation, it could not have been predicted that oil prices would rise to the level they did. That is a volatile situation at any time because the oil producing regions are volatile and it is not possible to predict what oil prices will be.

The Minister for Finance contributed to inflation as well. He put an extra 50p on a packet of cigarettes and that added almost 1% to the rate of inflation. However, that was done for a good reason – to support the public health policy. In this budget measures have been taken to decrease inflation, in particular in relation to transport costs, which are of vital importance in the control of inflation. The Minister has taken an all round approach to economic activity that will also contribute. Outside influences can and do contribute to inflation, but the measures introduced in the budget should contribute to a decrease in inflation. Let us hope that will happen during the next 12 months.

I compliment the Minister for Finance who, to some extent, has borne a heavy load in that there may have been a perception that he was dogmatic and uncaring, and that he did not listen to people. I do not know of any group that made a budget submission to the Minister which felt it was not listened to or that some of what it wanted was not implemented. People are now looking at the Minister in a different light because he has a sound economic policy and he believes in partnership, equality and sharing the country's wealth. I acknowledge that the comments of my colleague on the opposite side of the House, who, like myself, has been a Member for the past three years, were objective and complimentary to the Minister on his approach to the country's finances.

As a people we have unloaded the burdens of colonialism, the begging bowl, debt and immigration. They are all a watershed in so far as they are no longer part of the country's agenda. This House can be proud of that and it is appropriate to compliment the Government on the healthy state of our economy and the safe pair of hands that are in charge of our finances.

Mr. T. Hayes

I join with my colleagues in welcoming the Minister of State to the House for what is an interesting discussion. We are living in times of unprecedented economic growth – 8% is the figure used – and every day we see the changes that growth has brought about. I am reading a book about growing up in west Tipperary. The Minister may be interested in it because it is written by a fellow county person of hers, a man who grew up in Tipperary and then came to Dublin.

Mr. J. Doyle

So many of them came to Dublin.

Mr. Finneran

Senator Doyle crossed the Shannon also.

Mr. T. Hayes

The reason I am bringing the book to the notice of the Minister is that it illustrates the way we have progressed as a country. It tells the story of a young man growing up in those times, the poverty people endured, particularly in rural areas, and the enormous wealth that now exists in the countryside. The book was written by Larry Power of Coolnagun, near Donohill, a person known to the Minister, and I think it is entitled Over the Half Door. It is certainly a great read.

Many issues were referred to in the Minister's contribution. I do not wish to be negative about something that is extremely positive, but last week's budget was striking in that there was little or no reference to agriculture. Everybody knows that we are in the middle of a BSE crisis, one which will cost much more than people know. The cost of this crisis cannot be counted, yet it was extraordinary that the budget, which was welcomed by many people, made no mention of compensation for those affected by this crisis. That issue needs to be addressed on two fronts. There should be compensation for farmers but also for the consumers.

A proper marketing policy should be put in place for consumers. In a discussion here on the BSE crisis during the past week I said that consumers have doubts about what they are getting, but I am sure that the meat on sale in butcher stalls and shops throughout the country is the best in the world. We produce the finest beef in the world but there is concern among consumers in that regard. The agencies responsible should have got an extra allocation to market our products, particularly on the home market, because of that concern. Young people are wondering if it is safe to eat meat. The housewife is concerned also.

We are in the middle of a crisis but, I hope, it may be over at the end of a two year period. We are positive in many ways and we are not afraid to tackle these crises. Many measures are being put in place but there is an urgent need to educate consumers in relation to the safety of beef.

Mr. J. Doyle

What is extraordinary is that it is as dear as ever.

Mr. T. Fitzgerald

Leave the Senator alone.

Acting Chairman (Mr. Costello)

Senator Hayes, without interference.

Mr. J. Doyle

I would never interfere with him.

Mr. T. Hayes

The last time we had a BSE crisis a compensation package was put in place. At that time the Government provided a certain amount of money, which was matched by Europe. It is time to reinstate that package which resulted in grants, negotiated four years ago, which are still being paid. It is time the Government put in place a proper compensation package for these people because the losses they are enduring are huge and they will have devastating effects on some people. I am aware of people in my constituency who are losing thousands of pounds at a time of year when payments are due. The ACC Bank and others are looking for their payments but because of the fall in cattle prices, these people will not be able to meet those demands.

The Minister of State referred to other issues and I was particularly interested in her comments about the Department of the Environment and Local Government. At the Estimates meeting of our county council I was struck by the enormous sum of money available for national roads. A new road proposed from Cork to Dublin will pass through my county. The figures involved were extraordinary, but as rural councillors we were very vocal because of the small amount of funding available for county roads.

Senators Finneran and Joe Doyle referred to the increase in the number of cars on our roads. There is a huge increase in the number of cars on our roads and the old county roads structure in place in rural constituencies is unable to stand up to today's needs. It is time for a major investment in that structure. Some years ago the then Minister for the Environment, Deputy Howlin, put in place a four or five year plan. That was effective in its own way but there is a need for a plan for those small country roads which have been forgotten. At the present rate of progress, it will take 30 years to get around to resurfacing some of the roads in my county in particular.

Given the effects of the huge increase in traffic in rural areas on the tourism and agricultural industries, it is time country roads were restored, thereby giving the people of those areas the feeling that they are also being catered for. We hear about the huge amount of funding allocated for national roads. Money is available and I support the Government's proposals in regard to roads. However, we cannot forget rural areas and the need to allocate funding for these roads to county councils.

An issue of major concern to my county council over recent years is funding for flood relief. Everyone is aware of the major flooding problem in Clonmel. Efforts are being made to tackle this problem, but there are other areas which also need assistance, for example, Burncourt. Some weeks before the writ was moved for the June by- election, flooding in Burncourt destroyed roads and farms. However, when the county council applied to the Department of the Environment and Local Government for assistance, it was told to take the funding out of its own resources. In effect, this meant taking funding from the budgets for other areas. Given the problem of flash flooding, we need a fund which can be drawn down by local authorities during times of need. Some years ago flooding in Hollyford caused more than £1 million in damage and the county council had to borrow funding from the Estimates, which costed us back four or five years. There is a strong argument for the setting up of a special fund for flood relief.

I support the points made by Senator Finneran about the regions. Like any good politician, he referred to the need for Border and midland counties to be included in the Government's decentralisation programme. I represent a constituency which has not been included in the decentralisation programme. The Minister of State is an up and coming politician and I plead with her not to forget her home county, particularly the southern part, in the discussions on decentralisation. Given the benefits to counties which have been included in the programme, I plead with the Government to include south Tipperary in the next round of decentralisation. There should be a policy of encouraging private sector companies to move to the regions. My area is well located and there are many advantages to living and working there.

There are many other issues to which I could refer but the most pressing problem is the number of people on the housing list. I am aware of the Minister of State's interest in child care and the need to look after the most vulnerable people in society. I appeal to the Government to do all it can to enable more people to be housed. The scheme of housing aid for the elderly has a great track record and is one of the best schemes ever introduced. However, the number of applications is so large that the budget for the entire year is spent after only a few months. This has had an effect on the quality of life of many older people. The scheme should be extended to improve their quality of life.

Mr. Costello

I welcome the Minister of State to the House. This debate gives us an opportunity to look at the state of the nation in terms of budgetary matters and our economic stability or otherwise. We are glad to be able to report another successful and prosperous year of financial achievement in the industrial sphere. Once again, the financial chest is over-flowing and there are loads of goodies to be distributed.

On 16 December last year the Minister for Finance estimated that the rate of inflation for 1999 would be 1.6%, which was a wonderful prediction. Senator Finneran said that nobody could predict the rate of inflation unless they looked into a crystal ball. I have no doubt the Minister, Deputy McCreevy, was looking into a crystal ball but he did not see anything meaningful or logical. By that time the rate of inflation was already almost treble what it was for the previous month and by the end of January the rate was 4.8%. The estimated rate of inflation for the coming year is 4.5%, while the rate for this year is 5.5%, with the present rate running between 6% and 7%. The figures are so out of line with what the Minister for Finance said that we cannot accept any figure given to us. Anyone who comes into the House and says that the rate of inflation for 1999 will be 1.6% when it is going through the roof should not be allowed remain in office. I also question the advice on which he based his predictions.

That was bad enough but the Minister then sold this figure to the trade union movement, IBEC and farmers, and the Programme for Prosperity and Fairness was negotiated on the basis of a low inflation rate. However, we ended up with an inflation rate which was considerably higher than the agreed increase in wages under the programme. The knock-on effect of this has been unprecedented industrial strife. The country is in turmoil because of strikes and industrial action. Even as we speak, teachers are picketing outside the gates. The Minister said that the 17,000 teachers who have rejected the Programme for Prosperity and Fairness cannot be spoken to meaningfully unless they negotiate under the banner they have already rejected, the PPF. How can they do this? There is a Mexican stand-off on this issue.

I will not rehash all the strikes we have had this year but they started with the nurses and then moved on to the gardaí and all areas of transport – road, rail and air, where strikes are continuing on a regular basis. The reason is we could not control inflation and the Programme for Prosperity and Fairness was negotiated under false figures. We told the Minister that. I remember the Leas-Chathaoirleach and I telling him 12 months ago when the budget was being put together that he had skewed it in favour of the well off. We also told him that there would be a consumer binge which would be detrimental to us. When the well off get extra money they spend it on luxury goods which are produced abroad, particularly in non-euro land. When the poor get extra money they spend it on necessities which are produced at home. We buy most of our luxury goods from Britain, the United States and Japan. We must remember that 50% of our trade is with the European Union while the remainder is with sterling, dollar and yen countries. It is very expensive for us to purchase goods produced by those countries because the balance of the exchange rate is geared against us. There is a flow of money out of the country and this fuels inflation.

The Minister for Finance, Deputy McCreevy, has again produced a budget that is skewed in favour of the well off, people who will spend their surplus money on luxury goods not on necessities. Again, I predict that the proposed 4.5% inflation rise will be wide of the mark. It is a much higher figure than the 3.5% rise the Minister predicted last year; in fact it is double that now. This year he made a more realistic projection of 4.5% inflation for the coming year. I predict that the Minister will again be out of line with his prediction next year. He just pulls a figure out of the air. There are no measures in the budget that will stop the rise in inflation.

We have a surplus and unprecedented wealth. We must decide how we can mould a good quality of life and provide a fair and just society where the benefits of our prosperity are evenly distributed. With regard to the state of the nation, we must take the opportunity to look at where we will be 12 months down the line and look forward to the next 12 months. We are still very much part of the economic and business miracle here. Each Government, including this one, has contributed to this boom. I give credit to the Government for the fact that we still have a stable economy. Inflation is a very worrying trend and it undermines the partnership which is so important to our continued prosperity.

We are not sure any more whether we have a partnership. The private sector is breaking the partnership agreement left, right and centre. We have seen how it was broken by the gardaí and the nurses in the public sector. Teachers will not be satisfied without some consideration.

We can see to what extent the agreement has been broken when we look at the section dealing with the health budget in the Appropriation Bill. On page 7, line 33, an extra £817 million was given to the Department of Health and Children by way of appropriation-in-aid for 2000. That was the highest sum given out and it was in breach of partnership arrangements in terms of salaries. If the Minister of State can give me information to the contrary, I would like to hear it.

We should look at the level of inequality here at present. Since this Government came to power house prices and rent for private accommodation have doubled and homelessness has trebled. Last week homeless statistics were published in the newspapers. There are over 1,200 homeless in Dublin and they live in hostels, bed and breakfasts or rough. Over 100 of these people are children and they form part of the Minister of State's brief. The number of homeless is growing. I am a member of a local authority in Dublin and I know that it cannot house people. The waiting list for homeless people is as much as three years. It is a scandal that it takes between two and a half and three years for a homeless person to get accommodation from Dublin Corporation.

A young couple seeking to buy a house will not buy it with one salary. Individualisation means that it will be harder to buy a house now. It is impossible for a young couple to buy a house now because of the huge increase in prices.

We still have not seen the promised legislation on landlords and tenants. The relationship between landlords and their tenants is totally unbalanced. Landlords can evict tenants on a whim unless they have spent 20 years in situ. Why has no action been taken to solve this problem? These evicted tenants are going onto the homeless lists because they have no rights. Families and children are suffering. We need action on this issue.

In yesterday's newspapers we saw the downside of the education system. Yesterday the Taoiseach also announced, with President Clinton present, how wonderful our education system was and said it was the major factor that attracted multinational hi-tech industry here. The downside of this is that there is a whole segment of society where education is very limited. The Lourdes Youth and Community Service located off Seán McDermott Street conducted a survey of 100 teenagers in the area and the results were printed in The Irish Times yesterday. They found that 90% of them had not completed their leaving certificte course, over 50% had not sat their junior certificate examination, 40% were on illegal drugs and 80% abused alcohol even though they were under the age limit of 18 years set for the consumption of alcohol. As many as 70% of 16 year olds had engaged in sexual activity. The people surveyed had a profile of very severe disadvantage. That is the downside of the education system. What are we doing about it?

We have an excellent education system that serves 80% of our population where children are motivated, have good homes and a functional family. The remainder of the population need substantial resources, back-up and assistance that does not exist at present. Thousands of children are dropping out of the education system because there is no safety net or resources to keep them in it. These are the children who are reflected all the time in surveys.

Child care comes under the remit of the Minister of State. She lauds the child care benefits given in the budget. I accept there have been substantial improvements. However, I have a serious problem with the improvements in two areas, child benefit and capital funding for the provision of child care facilities. Child benefit will pay for more food and clothing but it will do nothing for the provision of child care or education. Capital funding from the Department of Justice, Equality and Law Reform assists in the provision of child care facilities but it does not cover running costs in terms of education input. A child minding facility is provided without any educational input.

A national pre-school education system is lacking. IBEC and the business community are running the economy. They want mothers to come back into the workforce and they do not give a damn about what educational facilities are provided for children. As long as child minders are available to take care of children in crèches and so on, employers are happy. The budget and its predecessors did not address the child's needs and I would like the Minister of State to direct her attention to this. A gap has been created by a lack in the provision of pre-school educational facilities by the State.

Vote 12 provides £735,000 for the secret service. A former Member of the House on one occasion asked whether that was a contradiction in terms. An appropriation-in-aid was not provided for it but I would love to know what the secret service does.

Ms Hanafin

It is a secret.

Mr. Costello

I doubt it is a secret. If it is an Irish secret service, I bet there are a few leaks in it. The Minister of State will be aware of what the service does and how it spends its allocation.

Vote 20 relates to the Garda and it provides for the payment of certain witnesses and payments for compensation and other expenses arising out of service in the local security force. To what extent are payments made to witnesses by the Garda? I presume people who give State's evidence and who might have been involved in criminal activity are covered under this provision. How much is expended by the Garda in pursuit of criminals and criminal activity?

Ireland's infrastructure is in rag order and there has been no progress. The public transport system is grinding to a halt. Traffic congestion in Dublin is unbelievable. Luas seems no closer than ever to being constructed. We are not even sure what routes it will take through the city centre, whether it will go overground or underground or both in the city centre and whether there will be a link to the airport. Dublin Corporation is trying to process an application for rezoning of land to enable the construction of a line that is supposed to criss-cross the Sligo-Dublin line. We cannot obtain information on whether there will be a link to the airport and, therefore, do not know whether we should rezone the necessary land.

The standard of the rail network is poor and dangerous. Trains travel more slowly now than they did 100 years ago. The nation's roads are in a poor condition. By-passes are constructed which create bottlenecks further down the road. When one travels along the N4 out of Dublin and goes through the Maynooth by-pass one encounters a major bottleneck for the next few miles where no overtaking is permitted. There are serious infrastructural problems with which we are apparently not coming to grips in a meaningful fashion.

There are still waiting lists for every category of surgery in our hospitals and the queues are lengthening. Anybody who has been in the accident and emergency room of a hospital in recent times will be aware of the time one must wait to be treated and the level of service that is provided. Everybody must spend between ten and 12 hours in an accident and emergency room before they are treated. It is a scandal given the funding that is available but the problem is how the money is spent because the service has deteriorated. It is good Government to ensure the service is effective and people are treated. Nobody is more vulnerable than a sick person who needs surgery and needs to avail of hospital services when they are not in good health but they receive the worst service.

It was petty that those who are on the national minimum wage were not taken out of the tax net. That would have been a great boost to people at the lower end of the salary scale. People who earn £144 or more per week are still taxed. Those who are on the minimum wage earning £176 per week are taxed on £30 of their income. It was recommended that those earning the minimum wage or less should have been taken out of the tax net and most commentators, including my own party, proposed that the tax free allowance threshold should have been increased to £200 per week to ensure a decent income for those at the lower end of the salary scale. Every penny they spend will go back into the economy and will not fuel inflation.

Ireland has a great economy and I hope its growth continues. I am concerned that inflation could damage economic growth but an economy does not make a nation. We need to ensure the benefits of the economy are evenly distributed and we have yet to see that in any of the budgets presented by the Government. I am not sure whether the Government will present another budget but it is disappointing that there has not been better and greater distribution of the moneys that have accrued to the Exchequer.

Minister of State at the Department of Health and Children (Ms Hanafin)

I thank all who contributed to the debate for their balanced, objective comments and the stimulating discussion. The Bill gives us an opportunity not just to look back but also to look forward. It is a good opportunity at this time of the year to reflect on the success of the economy, the changes that have come about and the fact that it remains a challenge for all of us to ensure people's quality of life is improved and prosperity is evenly shared.

A number of specific issues were raised. Senator Doyle referred to inflation difficulties but the latest figures demonstrate that measures taken by the Government are having an impact and it is expected inflation will fall this month and continue to fall next year. It is forecast to run at 4.5% next year. I hope Senator Costello does not quote me this time next year. While external factors had an influence this year, the changes in excise duties in the budget should have a positive effect on inflation.

A number of Senators mentioned infrastructure and the Government is obviously committed to implementing the infrastructural programme set out in the national development plan which will address all infrastructural needs. A number of mechanisms are in place to ensure that the targets are met and, from the level of Cabinet sub-committee down, people are ensuring the key investment for the plan is properly delivered and that people can see real results.

Senator Joe Doyle referred to savings measures and the Minister for Finance referred in the budget to measures already taken by cutting taxes on capital accumulation and by incentivising pension savings, both through tax changes and by giving savers a greater choice and control over their nest-eggs. The rate of capital gains tax was cut which brought the yield to £600 million this year alone. The Minister has announced a number of specific savings measures relating to credit unions and life assurance. I am sure we all accept there needs to be promotion of the idea of saving for young people to ensure, for their own benefit, that they at least take an interest in saving.

Senator Tom Hayes referred largely to agriculture and stated that farming was not mentioned in the budget. It was extensively dealt with under the areas of income tax and PRSI reductions for farmers, capital allowances for plant and machinery, stock relief, capital gains tax and capital acquisitions tax relief in the case of the acquisition of farmland under a compulsory purchase order, relief for site transfer and farmers' flat rate refund.

Senator Hayes also asked about flood relief. A Supplementary Estimate totalling £1.5 million was passed for the victims of flooding and that would obviously include people in Clonmel and south Tipperary because those areas were badly affected. That grant has been given to the Irish Red Cross Society to enable those identified as in need or hardship cases to have their money paid before Christmas.

I am sure we all share the concern about the impact on the agriculture industry of the BSE crisis. I know my colleagues, the Ministers for Agriculture, Food and Rural Development and Finance, are working jointly to see what response can be put in place for this crisis in light of the agreement reached at the Council of Agriculture Ministers on 4 December to deal with BSE and its impact on the beef market. It is not clear yet what exact effect this will have on the Exchequer but I will certainly pass Senator Hayes's comments to the Ministers.

Senators Costello and Joe Doyle referred to housing. It is important to note that £1 billion will be spent next year on local authority, social and affordable housing. Output has increased by 20% since 1997, there were 46,500 housing starts last year and average house prices for the third quarter of this year are well down.

People specifically asked about homelessness, which is a concern of mine, especially youth homelessness. I was delighted that an extra £5 million had been allocated in the budget for youth homelessness. That is on top of the money already allocated for capital expenditure to ensure emergency accommodation is available. I note that in the Eastern Regional Health Authority area two new centres are opening for young people, including the Meath Hospital. I have been assured by the authority that it is ready to open and it will provide extra beds for young people who need them.

Our aim as a society must be to ensure children do not end up on the streets and that the money is targeted towards ensuring early intervention, protection and family support. An extra £2 million has been allocated to ensure young people do not have to leave their homes and live on the streets. We will tackle that in two ways, by providing emergency accommodation and ensuring young people are reintegrated with their families. This remains a major concern of mine and is something on which we are working, not just on the capital side but also in ensuring money is made available to provide support services.

Senator Costello asked about the health Estimate and indicated that he believed much of it had gone on pay. In my opening address I outlined some of the expenditure but it will be seen that a great deal of the money will go on hepatitis C compensation payments, on various inquiries such as the organ retention and haemophiliac inquiries, the winter initiative, demand-led drugs schemes etc.

Senator Joe Doyle referred to foster care. In our dealings with children, a child is best looked after by his or her family. Where that cannot happen, another family situation is the ideal. That is why I welcome the increase in allowances where, from July, foster parents of a child under 12 will be paid £200 per week and £220 for a child 12 years or older. This recognises the important role such families play in the child care system and developing supports for children.

Senator Costello asked about the secret service. One of our colleagues once said that the Irish secret service was one of the great oxymorons of our time. I am advised by the officials that, in keeping with the fact that it is a secret service, traditionally its activities are not made known. The Senator asked about witnesses. Witnesses' expenses were £850,000 and the witness security programme was £650,000. Unfortunately, I do not have a breakdown of the exact components of that, but that is the general breakdown.

On child care, the specific elements of the national development plan are not just for capital expenditure. The breakdown of that funding refers to after school care, staffing – grants for staffing were announced today – developmental work and the guidelines issued by the Department of Health and Children. Although a great deal of emphasis has been placed on staff ratios and space, the first regulation and guideline is for an inspection to be carried out on the type of developmental work and its quality. That is the direction in which we must go to ensure services are provided for children. A great deal of the money is geared towards community facilities and ensuring that those in need receive assistance at an early stage.

Senator Costello referred to the Lourdes Youth and Community Services report featured in The Irish Times yesterday. It amuses me that it has already been released given that I have been invited to launch it tomorrow. I suspect they do not want my presence tomorrow.

An extra 176,000 people have been taken out of the tax net in the past three years. Although minimum wage earners are not out of the net, they pay less than £1 per week in tax, given that they only pay tax on the difference between their total earnings and that part of it outside the tax net. Real progress has been made. The success of the economy has been reflected in the partnership deals and in the structures which exist to allow us to co-operate.

I hope, in that context, the ASTI can see the progress that can be made. As a former secondary school teacher, I am obviously concerned about the effect this is having on the school community, especially young people. The initial concerns of the ASTI were about the benchmarking process. That has led to a development where a quarter of any agreed increases will be paid from December 2001. That might give the ASTI an opportunity to enter the benchmarking process to see how progress can be made in the interests and spirit of partnership. As is evidenced by the figures, we cannot afford to let that partnership go. The future of society depends on our working together to ensure that the development of the economy and the projections for it can lead to a good quality of life for everyone.

Senator Tom Hayes spoke about growing up in west Tipperary and the developments which have taken place there. I hope, as someone who grew up in north Tipperary, the Kickham idea of the welcome and friendship of the homes of Tipperary will never change, irrespective of the wealth we obtain.

Question put and agreed to.

Bill reported without recommendation, received for final consideration and ordered to be returned to the Dáil.